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Is Solar Ownership Poised For A Comeback?

With “no money down” and “zero maintenance” to attract homeowners, solar leasing has become the overwhelming favorite for residential solar installations. And with the complexity of tax incentives, rebates, and financing, it’s hard to find fault with homeowners that choose this low-effort option.

But giving up ownership means giving up a big share of the profits of going solar, and it may mean more expensive solar for society. So it’s good news that there are new options for making solar ownership as simple as a solar lease.

Why Lease

Solar leasing exploded in 2011, doubling to 46% of residential solar installations in California, then rising to nearly three-quarters in 2012 (with similar results in other states where 3rd party ownership is allowed). It’s no surprise.

Ownership of solar either requires a fair amount of cash ($10,000 or more) or financing. Financing for solar installations is not easy, since many banks (other than those financing leased systems) are still intimidated by what they see as a new technology. Financing is complicated by figuring out how to gain the 30% federal tax credit and state or utility incentives like rebates.

Add to that the responsibility of cleaning and maintenance of the solar array, and it’s no surprise that over two-thirds of the nearly 400 megawatts of solar installed on home rooftops in California since 2011 are owned by a third party.

The Losses of Leasing

But while leasing is simpler than ownership, any car buyer can tell you that ownership tends to be a better deal than leasing. That’s why only 25% percent of new cars were leased in 2013. The same is true for solar: ownership (while involving more risk) means better financial rewards.

Over the first 15 years, the various options are fairly comparable, with a financed and owned system providing the best “net present value,” followed by leasing, and a cash purchase coming in last (due to the high upfront payment). But over time, the benefits of ownership (via cash purchase or financing) grow to outstrip the value of leasing. (scroll to the bottom for our assumptions)

As shown here, the EnergySage website offers a comparison of a solar cash purchase v. a solar loan v. a solar lease, as well, but doesn’t disclose their assumptions. For example, do their financing options include deducting the loan interest? Do the lease terms last 15 or 20 or 25 years? Can a homeowner buy the system after their lease expires?

The bigger societal problem for solar leasing is that leasing may save individual electricity customers money on their electric bill, but the high cost of the solar middleman means more expensive purchases solar electricity for other electric customers. This chart, from the Massachusetts Department of Energy Resources, suggests that the cost of making solar leasing work is far higher than having the site host own the system.

New Options for Ownership

Fortunately, several new options are available for owning solar that lower the risk and increase the reward.

Mosaic, a company best known for providing crowd financing for community solar projects, has made inroads on simplifying individual home solar installations. Earlier this year they started providing crowd-financed home solar loans in Connecticut, and earlier this week they announced a solar loan product that includes maintenance, combining ownership via financing with the maintenance-free feeling of a solar lease.

Aleo, a subsidiary of solar-panel manufacturer Bosch, began offering zero-down loans at interest rates as low as 3% for home solar in 2013.

Solar leasing has helped the residential solar market grow significantly, and it’s help solved a problem of poor policy that requires individuals wanting solar to become tax and finance experts. But in the years ahead, the expiration of federal tax incentives and simplified options for ownership (and its significantly better long-term value) will mean a surge back toward solar ownership.

Solar cost comparison assumptions

Solar array

5 kW solar array, $4/Watt installed cost

30% federal tax credit, no state/utility incentives

1300 kWh AC output per kW DC per year, degrading 0.5% per year

$1000 inverter replacement in year 16 for all systems

Solar loan

5% interest on $0 down loan, 20-year term

Interest tax deductible at 25% marginal rate

Lease

15-year term

$50 initial monthly payments, inflating at 3%

Buyout in year 15 at 40% of original value

Electricity and Present Value

Initial retail price of 15 cents per kilowatt-hour, inflation at 3% per year

About the Author

John Farrell directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.
Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.
John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.

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jesse

I’m about to pull the trigger on a 20 year prepaid ppa. I would love to get your guys feedback on why I should buy and not do the prepaid ppa.

Cost is 17k for a 10.25 kw system. My rate comes to 5.7 cents /kwh. I’ve seen quotes for a purchase for similarly sized systems in my area for $30k-$45k (some even higher than 45) before the tax credit. None of the purchase quotes covered the inverter or labor past year 10. The 20 year ppa covers everything, including insurance, and the performance is guaranteed. If the panels don’t perform at the contracted rate, I get a check for the shortage. Given my average tax liability it would take many many years to recoup the tax credit (way past 2016) if I were to purchase. I can move the system for $1k, which is in the contract. I plan to live in my house or at least in my area long term. I fully expect that after 20 years I will be able to get a much cheaper system with a much smaller footprint. I was offered a per kwh rate that I’ve only seen in wholesale deals to large organizations. To me, it’s very clear why almost 70% do a ppa. Now, I wouldn’t do a pay as you go with an escalator, but most of the people I’ve talked to that have done the ppa or lease have either done the full prepay or paid a sum upfront to get rid of the escaltor.

Thoughts? Opinions?

Omega Centauri

$17K for 10.25KW is bargain cheap. But, since you are leasing the system, I’m not sure that refers to anyones real cost. 10.25KW is pretty large, have you looked into your usage, generally it makes financial sense to do efficiency upgrades first, then buy/lease a system thats the right size for your likely downsized needs. $.057/KWhour is pretty low as well. But what happens if your actual use is much lower than the system puts out? Does the utility reimburse you for at least $.057, or could you be providing the utility cheap power at your expense? A move clause is good to have, but does it cover where you might want to move? I think my next move will be out of state, and I’m not sure how many leasing companies would honour that.

jesse

I drive an EV so my usage is higher than average. I’ve had a Nissan Leaf for almost a year and because of my experience with it thus far, I don’t plan on buying an ICE car ever again. In fact, when a practical EV mini van or suv comes out I’ll probably end up with two EVs. My AC (American Standard) is less than 5 years old and it it had a higher than average seer rating when I put it in. Last summer I installed solar screens on my sunnier facing windows. But yes, I know there are still other things I can/need to do. As for usage, I forsee my (young) children using more and more power as they get older. And the possibility of getting an additional EV. But if it’s over sized right now and I bank more credits than I use, the credits never expire in my state so I could potentially use them years down the road. As for the move, it would have to be to a place that my utility covers, so no moving out of state. But this is a prepaid lease, there is only one payment, so I don’t expect it will be hard to convince a potential buyer to assume the lease and get free power for the next decade or so.

Omega Centauri

Doesn’t sound like you are letting too many efficiency stones go unturned. Where I live summers are very sunny and hot, and most people are paying tier-3 or tier 4 rates during the summer months ($.35/KWhour), so bills are high, and a lot of mostly lased solar systems are going up. Yet I have been getting by with a 2.4KW system, even with a plug in (3KWhours full charge). So at least in this climate its possible to get things much lower than most people would believe possible. I’ve always tried to precool the house with cold night air as much as possible. That alone probably halves my annual AC demand. Then I added attic foil (radiant barrier, and roughly doubled up on insulation), these cost maybe $200 each for parts, and are doable without much expertise or equipment. That probably again halved my AC demand. I’ve planted trees/shrubs/vines to minimize sun exposure on outside walls and window, and built a largeish seasonal shade structure over the deck. Insolation(sun) and insulation are the keys to seriously cutting down AC demand.

Electric dryer can be a big consumer as well. If you can switch to a gas dryer and/or use a clothes line when conditions allow it it can save a lot. Compared to AC and dryer, most of the rest of domestic use is in the noise.

Offgridman

Jesse,
You are asking for opinions without providing enough information.
It sounds wonderful that you are getting a system at about 1.66$/watt but then don’t give any information as to how this is being paid for. Is it a one time cash purchase or are you financing it out for a number of years? And if you are financing, why the concerns over the tax benefit which can be amortized?
Another question is you talk about your per kwh price from your ppa, but don’t give any information as to what you are currently paying or how much you are using from the utility company for comparison.
Also you talk of what others have done on the escalation of price on the Kwh, but it is unclear what is happening in your contract, does it happen or no? And at the end of this twenty year period do you own this system or no.
One last question that Omega Centauri also brought up in part is you say that you get a check for any shortage of the system for your power needs, do you get a credit for over production or does that return to the ppa company, and who has final responsibility to the utility for your total usage, you or the ppa?
There are plenty of people around here that are happy to play with these numbers and give an opinion, but what you have provided is a little incomplete.

Offgridman

Also as a PS, the cost on that system sounds good, but for about twice as much you could do an outright purchase and through net metering have no power bill if your usage falls within the constraints of what the system is producing so totally avoid the ppa agreement.
And if you do some shopping around will find inverter warranties that go way beyond that ten years you mention, some even for the life of the panels if you pay the cost.

jesse

Well, I actually thought I gave a lot of information in my initial post, I didn’t want to right a book. But I’m happy to answer questions.

1. cash

2. 12.4 cents /kwh, flat rate.

3. about 16000 kwh / year

4. It’s a full prepaid lease, meaning there is only one payment for the entire 20 years. So it’s not possible for there to be an escalator. So, no.

5. Yes, I get a credit that my utility banks until I use it. The credits never expire as long as I keep my account open.

6. If it under produces, I get a check for the shortage. If it over produces, I accumlate credits with my utility.

7. I do realize I could purchase for about twice what I’m paying for the ppa. But the way I see it is with the money I’m saving (about 17k) over doing a purchase now, I will likely be able to buy a system in 2034. A much better system with a smaller footprint. In 20 years the high soft costs should be figured out and efficiency should be much higher.

Also it would take several years for me to recoup the tax credit. In my first post I specifically said past 2016 because if the tax credit expires or is changed, I could possibly lose that tax credit.

“The credit for products that are not subject to the $1,500 maximum can be carried over to future years, as long as the credit is still in effect (through 2016).” <- this last part is key.

8. I could get warranties for the parts and find a local company willing to do a service contract for 20 years (maybe), but all of that adds to the $30k-$45k. And wouldn't include insurance on the system.

The ppa is simple. I want 5.7 cents /kwh, I don't care about the (technical) details. Also, the system (or I guess you could say contract), pays for itself in just over 7 years.

There, is that enough information for you?

Offgridman

“There, is that enough information for you? ”
Yes it helps, thanks.
Understood about not wanting to go into to long of a post, but it is hard to come to an opinion without some comparators.
From what you have explained in the various posts it sounds like a decent deal, especially with the fixed Kwh rate. If the US was to get switched over to primarily being supplied by renewable energy it is possible that grid rates could come down that low. Is it likely to happen within the period of your lease? Like you I am doubtful, to many incumbent politicians and vested interests in the fossil fueled grid to phase out first.
Congratulations and may your panels remain shade free.

ronwint

@ jesse, “I do realize I could purchase for about twice what I’m paying for the ppa.”

Actually that is not true. You could easily own a 10.25 kW system for $21,048 or $4,048 more. Not twice the amount.

ronwint

I have a question, who is your utility company ?

ronwint

In many areas of the country, you could easily own a name brand grid tie solar system with a built in secure power supply that would provide a total of 3,000 watts of emergency power during daylight hours, during a power outage without the need for batteries for only $21,048 after applying the 30% federal tax credit.

That way you’d have an asset with resale value that you could sell to use the proceeds to upgrade later and you would be increasing the resale value of your home.

With your PPA rental system you’ll be stuck with the same aging system for the next 20 years with no asset or resale value and no way to upgrade unless you sign a new lease.

I’m a factory trained inverter repair technician. I also offer tech support to our customers.

Bob_Wallace

And what sort of company do you work for?

ronwint

We’re a nationwide distributor of PV systems in business since 1997.

Bob_Wallace

Thanks.

So you have a vested interest in people purchasing and installing rather than leasing or using a PPA?

ronwint

Yes, after posting hundreds of comments, it’s well known that I have a vested interest in proliferation of PV. I would promote both leases as well as purchases if I believed that leases made sense.

Given the age, size and experience of the company that I work for and the fact that we own nearly every prominent, keyword driven domain name associated with the leasing and PPA industry, we could have easily entered the leasing market but chose not to early on.

jesse

Ron,

The ppa guarantees performance and covers any equipment failures. Because of this gurantee, and it being very clear in the contract, I don’t need to worry about brand names.

As for the price, that’s after the tax credit, see my other posts.

There will be value in a prepaid lease because it’s prepaid. I may not get dollar for dollar what I’ve paid in to it, but who wouldn’t see value in a 5.7 cents /kwh, maintenance free system for 20 years? Also, I plan on staying put long term.

Yes, I will in effect be renting it, but I don’t see your point about it being an “aging” system. It’s performance is guaranteed. If parts fail due to “aging” they get replaced at no cost to me. I think it will have resale value, and there are options to upgrade it if my usuage increases. And of course there will be new $ if I want more production.

I have read that bloomberg article. What scares potential home buyers are the decade(s) long commitment of payments and the escaltor. My deal does not have either of these. One payment. No escalator. Which is another reason why I’m choosing to do the full prepay. In general, I would not recommend that anyone get a pay as you go lease with an escalator. We don’t know what energy prices will be in 20 years. And I actually think they may be lower than what we’re paying today. But do I think they will be lower than 5.7 cents in 20 years? No. Do I think they will be dramatically reduced before my estimated payoff in 7 years? Nope.

Patrick Lawson

The PP lease does not come with the same real estate headaches that a fixed monthly lease does. Additionally, there are loan programs available for the prepaid lease, namely the FHA Powersaver Home Improvement Loan (AKA, FHA Title I)

In the case of a home purchase you can even include a PP lease into the purchase mortgage.

Sounds like you’ve got a good grasp on all the various moving pieces and have positioned yourself well.

ronwint

I don’t know if you missed my question but, could you please tell me who your electric company is?

Thank you

ronwint

By the term “aging system” system I was referring to the aesthetics of the system not the performance. Just like the massive, boxy looking solar hot water heaters that you still see on homes today, detract from the homes value. A solar PV system installed today will probably look pretty dated by year 12 or 13, after several rounds of technology improvements.

In order to take full advantage of your pre-paid lease investment you will probably want to keep the system for the full 20 year term of the lease. With no way to sell the system and use the proceeds to upgrade like you would be able to do with a purchased system, that’s what I meant by being stuck with the same aging system.

jesse

NVEnergy.

There is only a slight chance that I’ll need panels on the front facing side of my roof that would be visible from the street. But I get what you’re saying.
If a potential buyer really didn’t want them, I would just transfer the system to my new residence ($1000, in the contract).

And I appreciate your feedback. I don’t think a ppa/lease is for everyone, but I think my reasoning still stands that it’s right for me.

Patrick Lawson

The loan options referenced are not the best available on the market.

For instance, DCU offers 100% financing at a rate around 7.5% for 20 years on sunpower systems and it’s unsecured. That’s phenomenal.

Admirals bank offers a Title I home loan program. Rates are under 10% and the interest is generally tax deductible.

Local credit unions are offering loans in their respective markets.

Energy Efficient Mortgages have been available for years. With rates below 4% (www.azenergyloans.com)

Additionally, installers have the option of originating their own retail installment contracts, thus keeping finance approval “in-house” and there are investors that will purchase these contracts. Rates are slightly worse than Admirals bank but the installer has “control” if that is their desire.

To the point of leased solar complicating home sales. Here in my market it is. Just this morning at an open house I was speaking with a listing agent who is having problems with a home with leased solar getting any attention. Between news coverage about leased solar presenting issues and real estate buyers agents steering their clients away from leased solar, it’s an issue.

It remains to be seen how this will play out, but I expect some enterprising individuals will start companies in the business of negotiating lease modifications as the problem becomes more prevalent.

ronwint

With the exception of maybe larger commercial and industrial projects, third party financing has already started it’s downward trend and will for the most part disappear from the PV financing scene by the end of 2015. Mark my word.

ronwint

Great article but the cost for purchasing a solar system is far lower than the $4.00 per watt indicated. Today it is common to find pricing on name brand solar systems as low as $3.20 per watt for an installed system before the 30% federal tax credit. And yes, James Wimberley, type in the search term “solar lease home sale” and you can find plenty of evidence regarding the difficulties that homeowners are experiencing when trying to sell a home with a solar lease or PPA attached to it.

Bob_Wallace

I googled “solar lease home sale”.

All I saw was opinions. Not any data that proves the issue, one way or the other.

ronwint

Many of those “opinions” come from home sellers and real restate professionals who were involved in these transactions. Here’s a few quotes:

A HOMEOWNER: “We signed a solar lease with xxxxx xxxx. Wish we had done more research (Even though we did do some). Even though it’s 0 down and low monthly payments, we didn’t realize that our payments will be going up every year. At the end of our lease our payments will be over $300, A MONTH. We hardly ever paid over $300 a month with SCE. Only once or twice a year in the summer. Also, we have been contemplating the possibility of Short selling our house, and are seeing that these solar panels are going to be a HUGE hinderance in doing this. Even if we wanted to do a regular sale, with the housing market prices the way they were, if we could get what we owe on the house, we would have to add another $50,000 to the sale price because of the solar panels. Bottom line….if you can’t afford to pay for them or finance them, DON’T LEASE! We are really sorry we did.”

A HOMEOWNER: “We are trying to sell our home with a solar lease that just started a few months ago. We didnt plan on moving so soon, but the sequester changed that so it is what it is. Here is the issue. It has been a nightmare trying to sell our home with the lease attached to it. We lost one sale after the home inspection due to the buyers deciding they didnt like the lease. Plus we are having issues getting people in to the home once they find out about our lease. The funny thing is that the panels work great and we even put together a print out proving that our system saves a lot of money. People seem to be scared of the lease being 20 years long and they cant look past that. If anyone has any ideas I would appreciate them. Also, take my advice in that selling a home with a solar lease is not at all easy and makes an already stressful process even worse.”

A REAL ESTATE PROFFESIONAL: “The curse ! I tried to sell one in the Desert and even though it was only about $150 / month, no Buyer would touch it. That property ended up going to Foreclosure! Good luck !”

A HOMEOWNER: “We are leasing a $26,000 solar system, and in order to qualify to take over the lease the buyer must have a 700 credit score or above. So if we ever sell the house we would have to wrap the remainder of the lease of the solar system into the cost of the house. Depending on how long we are in the house that would bump the price of the house up significantly.”

A HOMEOWNER: “I was recently involved in a potential sale that failed due to two year old xxxxxx xxxxx lease. Solar leases are still quite new and many of the folks than have taken them have not yet tried to sell their homes. Mr. xxxxxx glossed over the detail that will cause a potential sale to grind to a screeching halt like what if the buyer doesn’t have a 680 credit score? What if the buyer doesn’t want the system? How much does it cost to actually move the system/ Is it worth it? When the lease is terminated, will xxxxxx xxxxx remove all mechanical attachment points/flashings/penetrations and repair the roof to as new condition with the same warranty the rest of the roof carries or will they simply abandon the old racking in place and take the high value solar panels?”

A REAL ESTATE PROFFESIONAL: “I too have recently been in a transaction where a solar lease is involved. The property is selling for well above $2,000,000 and the buyer did NOT want to take over the solar lease–thinking it was a very bad investment and he would have much preferred to have bought solar equipment outight. It took a lot of negotiating to bring the buyer and seller together on this issue so I agree that many of the people with the leases have not yet experienced what prospecttive buyers will think about it. It will remain an item to be negotiated. Also, I think it is a poor idea to put the panels on the front of the house–which some people have done. It does not look good for the indiviual house or for the neighborhood.”

A REAL ESTATE PROFFESIONAL: “If you are considering leasing a solar system, please read this first. I have actually come across this in my business. Not only problem with buyers qualifying but shying away from these homes because they don’t understand the lease. There can be issues to a solar lease if a homeowner decides to sell their home.”

Bob_Wallace

Ever hear the expression “Stuck pigs squeal”?

Anecdotal data is useless for any use other than suggesting a need for actual research.

Who’s screaming ? I used all caps only to break up the text so it would be easier to read. And the all caps in the quoted comments were from the original authors in their original form. That’s why there are quotation marks surrounding the quoted comments. You do know what quotation mark are don’t you Bob? LOL!

Bob_Wallace

You’ve had your one and only notice, Ron.

ronwint

Do you think I care about what you say or do Bob ? You can use your communist style threats to silence my opinions on this website if you like.

There are dozens of other websites that allow free speech as long as I adhere to their guidelines and policies and then there are the over 900 PV related websites that I control where I can post the truth as to how you censored my opinions simply because you disagreed with me.

Please remember what country this is Bob, before you threaten me again.

Bob_Wallace

You weren’t so much “threatened” as informed of site policy and given your warning.

Your first amendment rights have nothing at all to do with what you can post on an internet site. You might wish to review your constitutional rights so that you better understand them. Might come in handy some day.
You’ve been allowed to post your opinion here, ron, and I’m one of the people who have told you that you’re kind of a one note Johnny which makes you a bit of a bore.

And that’s my opinion, which has nothing to do with site policy.

ronwint

Thank you for allowing me to post my opinion Bob.

Bob_Wallace

Thank the owners of the site. Who are also the people who set policy.

Offgridman

As in any commentary line those that have a complaint or problem are the first to speak up, and happy customers are much less likely to take the time to post.
There is no denying that having a leased solar system is causing problems for some people trying to sell their homes. But the thread you shared doesn’t in any way show what percentage of all the leased systems, or even of just those with leases trying to sell their homes are having problems because of the lease.
Even with just the posts you shared here many say that it is their own fault for not doing enough research beforehand on what would happen in the case of a home safe, and even what the payments were going to be during the whole lease.
While entirely sympathetic with those having a problem selling their homes with a lease, for anyone making a 10-30,000$ investment it is your own responsibility to do the research and understand what the results will be in any of the variety future scenarios. Just like with buying or leasing a car, buying or leasing a solar system means the purchaser has to take the time to totally understand the terms and results and not count on just the words of the salesman, or be sure to get them in the contract.

Bob_Wallace

My father owned a hardware store. He used to say that a satisfied customer might tell someone else about their experience. An unhappy customer was going to tell a dozen others.

While reading some of the links on Ron’s suggested search I ran across this from one of the leasing company’s FAQ page –

“Q. What happens if I sign a lease and I want to sell my house in 5 years?
A. You have three options. First, you can ask us to move the system to your new house. We do that one time for free for customers on a 10-year term who extend for second term. Second, you can transfer the Agreement to the new owner. This can potentially add value to your house because if energy rates continue to rise and are say 15% higher in 5 years, then your buyer would get a 15% decrease on their energy bill because of your foresight. The final option is that you can contact Citizenre, tell us that you want to end the Agreement and we will remove the unit. With this third option you do pay a cancellation penalty of $500 or 10 cents per watt peak, whichever greater.”

What is the matter with you people? I used all caps to identify the authors only to break up the text so it would be easier to read.

And the all caps in the quoted comments were from the original authors in their original form. That’s why there are quotation marks surrounding the quoted comments. You do know what quotation mark are don’t you jean? LOL!

Calamity_Jean

I’m sorry, I thought I was just passing along some useful information. Please accept my apology, and ignore my previous posting.

JamesWimberley

An additional point against leasing is the potential problem of resale. There are rumours that a leased solar roof actually lowers the resale value of a house, as the purchasers have to take on a lease which may not suit them, and closes off the option of buying a new installation on better terms. Has anybody got solid evidence on this?

Bob_Wallace

We’ve had that discussion on a couple other threads. There appears to be no data as to whether a leased solar system would increase, decrease, or do nothing to selling prices.

There’s a large amount of hostility toward leasing. I get the feeling that a fair amount of it is coming from sellers/installers.

The math works better for ownership. But some people prefer to lease, just as some people prefer to lease cars rather than purchase.

Steve Grinwis

I leased my EV, because the incentives were good enough that it never made sense to buy the car under any scenario. I’m also betting Ev’s are going to improve rapidly in the short term, and I don’t want to be stuck with a relic.

Seems like there isn’t a similar case for solar though.

Omega Centauri

As a guy who wants to own his own solar, it would be a bit of a detriment, although I suspect in many cases the leasing company would be willing to sell the asset. If the price was competitive with getting a comparable system installed, I’d consider it to be a slight plus (avoiding the hastle of getting one installed).

But, I suppose for the guy who didn’t want the system, the backup penalty could be a problem. Or for someone like me, whose power requirements are well below the norm, the system may be greatly oversized, and unless the utility pays decently for unused solar power it could end up hurting moneywise. But a similar issue would come up with an already “owned” system -if it is oversized for the new home owners.

Bob_Wallace

Have you considered a “starter set”, a minimally sized system that you could expand over time?

Omega Centauri

Actually, I’ve had a system for nearly five years, I was speaking hypothetically. I have the resources, I’d just purchase a system without a loan/lease. But, I realize most potential customers aren’t in that position.

In some sense I have a starter system, I’d like to add more capacity, but not so much that the extra soft-costs would make sense.

I do like the idea of those 1.5KW plug & play systems

Offgridman

As Bob suggests there are starter kits, one that you can look for on this site in a couple of articles or the web is Mage solar. You get panels, mounts, grid tie inverter and just plug it in to a dedicated 110 or 220 volt AC outlet to offset your use when the sun shines, and if I remember right they start for under two grand. So if you don’t have the cash, easily done with a credit card. They have even added a backup kit with batteries for when the power goes out or let you go totally off grid the way we have.
There are so many new options in the way of solar for the individual now at way lower prices that at times I wonder if I should have waited a few more years. But with a little reconsideration the past seven years with no power bills and no black outs have made it well worthwhile, so I would encourage anyone to get started as big or small as you can and enjoy your independence and savings.

Offgridman

As you say banks are getting more reasonable on loans, but I think this may be more especially in states that are friendlier to solar.
While Tennessee isn’t exactly unfriendly as power coops under TVA allow net metering, there are no property tax benefits or other incentives.
Eight years ago my credit union was willing to loan the money but the interest rate would have been 12% (like a boat or RV) if installing myself, and 9-10% (car loan rates at time) if hiring contractor.
Having worked as an electrician (but in another state, no cross certification) wanted to save the install fees towards bigger system.
So my work around was to get four credit cards with no interest for the first year and purchase all the panels and other equipment that way. Six months later after finishing the install and going back to the credit union they had no problem giving me a 12 grand property loan at 6% to pay off the credit cards, with the side benefit that the interest is now down to 4% being variable and paying off all those credit cards bumped my credit rating a hundred points.
Just offering this as an option for those wanting to own their systems even if hiring an installer if you are in a state like Tennessee where Mosaic and Aleo won’t cover you.

Bob_Wallace

That’s some damn clever financing.

Offgridman

Thanks for the compliment, but it was really just the result of that old case that necessity is the mother of invention.
Hopefully as we get rid of the old guard politicians and get a comprehensive energy policy in our country this kind of game will become unnecessary.
But until that time if my idea is usable for someone else or inspires their own means of gaming the system will be enough to make me happy.
My own reward of power bills only being half of what they were through the ten years of loan payments and for free after that for the life of the system have proven the effort well worthwhile.

Omega Centauri

I fear your financing carried more rollover risk than you were aware. What if you couldn’t get a low interest loan after the year was up? As it was, it worked out great, but others might not be so fortunate.

Offgridman

Not so high a risk as you might think, because of paying my bills and not over extending my credit back during the boom years I already had a good credit rating. It is just at that time (8 years ago as I said) the credit union saw solar as a high risk investment like buying a cabin cruiser beyond my budget and wanted what to me was a ridiculous amount of interest. Perhaps I could have gone back and just asked for a straight out property loan, but this is a very small town and they probably would have remembered what I was in asking about the week before.
But once the money was spent it didn’t matter what for, I could have filled those cards up with trips to the Bahamas they were very willing to do a consolidation with long term payoff to get the profits for themselves.
Now as for the dropping interest rate that was just sheer luck and what happened with the economy, but even if it had gone the other way it would have maxed at 8.75, still way better than the original offer of 12%.
What happened with me was in part just a circumstance of timing and location and may not work out exactly the same for another. But my point as explained to Bob is that some states still aren’t favorable to solar investments, but with a little creative thinking maybe others can find a way to do it.

UKGary

The leasing market is a peculiarity of the US tax code – other country’s solar incentives do not generate this market distortion.

In the UK, leasing whilst known, is a small part of the market with the majority of domestic solar arrays paid for out of savings, funded by a bank loan, or included as a standard feature on new build homes. There is also an arrangement called Green Deal in which a loan for solar or energy efficiency measures such as insulation is tied to the house rather than the individual borrower – with any remaining loan carried over to the next owner. (The idea being that the loan is more than covered by the efficiency measures).

Wind Energy

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